If you are in the market for flood insurance or might need a policy soon to qualify for a mortgage, don't wait to buy it.
Unless Congress extends it, the National Flood Insurance Program will expire May 31 — the day before hurricane season starts. Existing policies would remain in effect, but consumers wouldn't be able to buy and renew policies or increase their coverage.
The fate of the federal flood program has been tied to legislation that briefly extends unemployment and COBRA health benefits. Twice this year, the flood program was suspended as members of Congress delayed passing the legislation while squabbling over other issues. Most recently, the flood insurance program lapsed from March 29 through April 15.
Beth Gismondi, owner of Gismondi Insurance in Ocean City, has been selling flood insurance for 20 years. She says the program has been suspended three or four times during that time.
"But never for two weeks," Gismondi says. "It was not fair."
Standard homeowners' policies don't cover flooding. The 42-year-old federal program covers damage from events such as heavy rains, melting snow and coastal storm surges. The maximum homeowner limits are $250,000 for a house and $100,000 for contents, although some private insurers offer coverage once federal caps are reached.
Maryland isn't immune to flooding. The state sustained damage in three of the top 10 floods in the country since the late 1970s, including Hurricanes Isabel in 2003 and Ivan a year later.
Homebuyers must have the insurance if they are purchasing a house in an area at high risk of flooding and getting a mortgage from a federally insured lender.
Some buyers recently had closings delayed a week or two because they couldn't get a policy during the program's suspension, says Jim Pair, president of the National Association of Mortgage Brokers.
Gismondi says that during that 18-day hiatus, she continued to take policy applications and federal underwriters continued their work. Once Congress passed the legislation last week, the policies were made just as if the program had been in place at time of the application.
There may be more urgency now to get a policy beyond the coming hurricane season, which is expected to be more active than last year. Some buyers are rushing to get a house under contract this month and close by the end of June so they can qualify for the federal homebuyer credit.
Pair predicts legislators won't let the flood program lapse again because they got an earful from constituents last time.
"Congress should realize we are in a critical situation in the housing market," Pair says. "And not closing on a loan for [a lack of] flood insurance is not helping the market."
But why take any chances that Congress will extend the flood program without another glitch? If you're in the market for flood insurance, get it before May 31 and be warned that policies on your current home won't take effect for 30 days. You can check out premiums and find a local agent who sells flood insurance at FloodSmart.gov.
Doug Waire, an agent with State Farm Insurance in Dundalk, says that as long as homebuyers apply for a policy and pay for it by the end of May, there should be no problem — even if they are closing on a house in June.
Waire says his office recently had a few customers who weren't able to buy a flood policy.
"We could have this same thing happen in another month and a half," he says. "It's unchartered territory for me. I'm hoping this is just a temporary thing."
It may be.
A proposal in Congress would extend the flood program for five years and raise the coverage to $335,000 for a house and $135,000 for contents.